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Motilal Oswal Report
Tata Communications Ltd. reported 1% growth QoQ in revenue (in line) and a 7% decline QoQ in Ebitda (9% miss) in Q4 FY24 due to higher integration expenses. Adjusting for the acquisitions, data revenue and data Ebitda was flat QoQ.
The management's endeavor to drive growth, including the loss-making acquisitions, has resulted in margin contraction. However, the long-term focus on margin-accretive growth remains intact.
We estimate a compound annual growth rate of 14%/20% in revenue/Ebitda over FY24-26.
At price/earning of 22 times and enterprise value/Ebitda of 9.1 times on FY26E, we see limited upside. We reiterate our Neutral rating on the stock.
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